The European Commission’s Bind

The European Commission, the EU’s executive and engine of the region’s ‘ever closer union,’ is stuck in a heads-you -win, tails-I-lose bind.

Like European governments, its deepest fear is a disorderly collapse of the euro zone, unleashing economic chaos and an upsurge of nationalism throughout the continent.

But there’s a second anxiety looming ever larger: the euro zone saves itself by embracing tight economic and budgetary rules in return for greater pooling of resources. But it does so through an accord between governments which cuts the Commission out. The EU’s executive becomes a rump institution whose main task is to try and minimize ever-greater divisions between the euro ‘ins’ and the ‘outs.’

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On Monday, in their press conference in Paris, French President Nicolas Sarkozy and German Chancellor Angela Merkel said the intergovernmental route remains an option. “We’re open to change those treaties for the 27, that would be the most logical way,” said Merkel. “But we are also absolutely determined–if there are difficulties about it, if someone doesn’t want to or cannot take part–to say the euro is so important for us, that we would then also go the path of the 17 euro countries, and are open for others who want to take part.”

That threat is part tactical – aimed at neutering U.K. demands for British interests to be explicitly safeguarded as a quid pro quo for letting treaty change through. The U.K. is most concerned about being locked out of decision making on designing financial regulation. It also fears euro-zone interference in the single market which guarantees a level playing field for EU goods and services.

Yet the warning also feeds into a deeper view, particularly in France, that the direction and pace of European integration should no longer be set by the bureaucracy in Brussels. A coalition of willing national governments– choosing to pool their sovereignty where necessary–should drive integration.

“The reform of Europe is not a march towards supra-nationality,” Sarkozy said in his big speech on Europe last week in Toulon. “The crisis has pushed the heads of state and government to assume greater responsibilities because ultimately they have the democratic legitimacy to take decisions.” It’s a view that spreads panic in an already panicky Commission.

In a speech last month at the European Parliament, Commission President José Manuel Barroso pleaded against any moves that would split the EU in two. “For the euro, we don’t need another Commission, another Parliament, another Court of Justice. The euro is a central part of the European Union,” he said. “We will not make the euro stronger through fragmentation of the European Union.”

That’s a view that elicits much sympathy inside as well as outside the euro zone. Smaller euro-zone countries in particular see EU rules as a vital buttress protecting their voice and offsetting Franco-German dominance. Yet in the race for survival in coming weeks–as market pressures mount and the creeping pace of EU decision-making sows fresh consternation–it’s a plea that may fall on deaf ears.

About Real Time Brussels

The Wall Street Journal’s Brussels blog is produced by the Brussels bureau of The Wall Street Journal and Dow Jones Newswires. The bureau has been headed since 2009 by Stephen Fidler, who was previously a correspondent and editor for the Financial Times and Reuters. Also posting regularly: Matthew Dalton, Viktoria Dendrinou, Tom Fairless, Naftali Bendavid, Laurence Norman, Gabriele Steinhauser and Valentina Pop.